Amazon’s Free Cash Flow Swings to $42.4 Billion Outflow as Nasdaq Falls 2.9%

Key Facts

The Nasdaq Composite fell 2.9% in Friday’s session on October 30, closing at 25,437 points, in a decline market reports linked to investor concerns about the scale of AI spending and the returns it could generate. Amazon’s results showed that trailing 12-month free cash flow through September 30 turned into an outflow of $42.357 billion, compared with an inflow of $14.788 billion in the comparable prior period. In the same session, Amazon shares closed at $240.35, compared with $243.79 the previous day, while Alphabet shares ended trading at $279.84, after $283.82. The index’s decline came after it had fallen 7.8% from its record closing high set on October 6, according to Reuters. The S&P 500 also fell 1.8% on Friday, while the Nasdaq lost 518.34 points, or 2%, for the week, despite remaining up 9.4% year to date through October 30.

Amazon said the decline in free cash flow was mainly due to a $94.8 billion year-over-year increase in purchases of property and equipment, net of sale proceeds and incentives. The company’s cash capital expenditure was $75.9 billion in the third quarter of 2026, compared with $34.2 billion in the same quarter a year earlier. The company said the spending primarily reflects investments in technology infrastructure, most of which support growth in its AWS business. At the same time, Amazon’s net sales rose to $201.944 billion in the third quarter from $180.169 billion a year earlier, and AWS sales increased 39% year over year. The figures put cloud business growth alongside expanding capital expenditure, as the amount of cash used for expansion has become a focus in reading the company’s results.

Amazon said it expects cash capital expenditure of about $220 billion in fiscal 2026, with a clear increase in 2027, driven mainly by technology infrastructure investments. In premarket trading on October 30, the company’s shares fell 6.3% after it reported the cash outflow and signaled a further increase in capital expenditure the following year, according to Reuters. After trading began, the stock fell 1.4%, according to the Associated Press, which attributed the decline to summer earnings below analysts’ expectations. The pressure on Amazon shares extended to technology stocks broadly, amid questions about whether spending can generate earnings and productivity gains that justify the investment. The Associated Press reported concerns that higher interest rates could also slow data center expansion.

Alphabet, by contrast, reported revenue growth, with third-quarter revenue up 25% to $127.6 billion, while Google Cloud revenue rose 103% to $30.7 billion, supported by demand for infrastructure and AI solutions. Chief Executive Sundar Pichai said the company’s AI investments are driving growth in Search queries, including commercial queries. He added that the annual growth rate in queries reached its highest level in five years. But Alphabet shares fell more than 12% on October 29, marking their worst day ever, after the company reported that it had used more cash in the summer than in the spring, according to the Associated Press. The stock closed the following day at $279.84, extending its decline from the previous close.

Concerns also extended to the combined spending of the largest technology companies. Swissquote analyst Ipek Ozkardeskaya said Amazon, Google, Microsoft and Meta together spent more than $200 billion in the third quarter to deliver cloud computing growth. She warned that higher financing costs could reduce the funds available for expansion and debt repayment. Nasdaq futures had fallen more than 2% on October 30 as concerns resurfaced over the cost of building AI infrastructure and the time needed to generate returns, according to Reuters. LSEG data cited by Reuters pointed to expectations of interest rate increases totaling more than 50 basis points by mid-2027. Amazon’s announced capital expenditure figures for 2026 and 2027, alongside the trajectory of cloud revenue, remain among the key indicators to watch in upcoming results.